IPOs in 2011 met with highs and lows, Facebook debut ahead

30th Dec 2011, 11:48 am by Deborah Sterescu
IPOs in 2011 met with highs and lows, Facebook debut ahead

IPOs in 2011 saw some high profile action from the likes of LinkedIn (NYSE:LNKD), Pandora (NYSE:P), and Zynga (NASDAQ:ZNGA), but not all of these listings were met with success, as those that managed to get through the public markets in the second half of the year were mired by volatile trading on the back of more than one troubling economic trigger.

The year started off with a heap of action, and then slowed in the second half, as the S&P downgrade of US debt, and the worsening debt crisis in Europe took its toll on equity markets.

At the end of March, GNC Holdings (NYSE:GNC), the parent company of the nutritional supplement retailer, raised $360 million, and remains one of the top performing IPOs of 2011. Its stock has surged nearly 74 percent since its initial listing.

Leveraged buyout targets like Kinder Morgan (NYSE:KMI) listed in a $2.87 billion IPO in February - providing some evidence that investor appetite had returned to the markets.

Kinder Morgan is one of the largest pipeline transportation and energy storage companies in North America, with approximately 37,000 miles of pipelines and 180 terminals. The company was taken private in 2006, before the recession hit, in a $22 billion leveraged buyout deal.

It listed at $30 - above the estimated range of between $26-$29 - and is now trading at nearly $32.00.

LinkedIn, the best performer of the year's high-profile batch of social media IPOs, was yet another success. The company, which provides a professional social network catered to employers and job seekers, listed at the end of May in a $353 million IPO.

The company listed 7.84 million shares of its common stock at a price of $45.00 per share, with its shares currently changing hands at $62.99.

Internet IPOs are seemingly making a comeback, with Bankrate (NYSE:RATE), Groupon (NASDAQ:GRPN), LinkedIn and Zynga raising a combined $2.4 billion this year.

Groupon's IPO, which valued it at almost $13 billion and raised $700 million for the company, had an offering price of $20, and opened at $28 on its first trading day. The company, which provides internet coupons for restaurants, spas and more in a subscriber's respective city, is currently trading around $20.6, however.

Online social games maker Zynga shares have mostly traded below their $10 offering price since the $1 billion IPO earlier this month, which some bankers say could hurt Morgan Stanley’s chances in winning the lead investment banking role in the highly anticipated Facebook IPO deal in 2012. Zynga is now trading at $9.20.

Internet radio business Pandora shares popped initially after listing in June, but are also now trading barely above $10, far below the $16 IPO price.

Despite a less-than-stellar performance for newly-listed companies in the second half of the year, an active start to 2011 saw more than a few deals that met with healthy demand and returns.

Investors are now looking forward to 2012, with policy makers attempting to instill greater economic stability globally, potentially paving the way for a host of companies, including Facebook, to make their public market debut.

The IPO of social networking giant Facebook could fetch as much as $10 billion, which would value the company at $100 billion or more. These projections mean this Menlo Park, California-based company can IPO whether market conditions prove positive or not.

According to reports, the company plans to file its offering documents early in the new year.

If equity markets improve though, however impossible to predict, 2012 could see IPO action from several names other than Facebook, including AMC Entertainment and Party City.

No investment advice


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